The price of WTO Membership

Economies such as Chi­na and Tai­wan that joined the WTOafter the WTO Agree­ments entered into force (1995) have had to com­ply with the rules with­out access, in most cas­es, to the long imple­men­ta­tion peri­ods avail­able to orig­i­nalWTO Mem­bers; economies that were for­mer­ly mem­bers of the GATT. Com­pli­ance is dif­fi­cult enough. But the bilat­er­al deals on mar­ket access that are the sec­ond ‘down­pay­ment’ on Mem­ber­ship can be even tougher, as Viet­nam is find­ing: bq. There are still 27 coun­tries requir­ing nego­ti­a­tion rounds with Viet­nam. Last June, Viet­nam con­duct­ed 20 bilat­er­al rounds of nego­ti­a­tions with 17 WTO mem­bers, includ­ing the Euro­pean Union (EU), the US, Cana­da, the Repub­lic of Korea, Aus­tralia, Nor­way, Cuba, Uruguay, Argenti­na, Brazil, Japan, Switzer­land, New Zealand, India, Tai­wan, Chile and Paraguay. These nego­ti­a­tion rounds focused on goods and ser­vices fields. So far, Viet­nam has com­plet­ed nego­ti­a­tions with six out of 27 part­ners. (“VOV News”:http://www.vov.org.vn/2005_04_04/english/kinhte1.htm#VietnamonthewaytojoiningWTO) Even this, how­ev­er, is more eas­i­ly man­aged than the chal­lenges that begin once acces­sion is com­plete. At that point, the com­mer­cial impacts of new com­pe­ti­tion from imports begin. As the Chi­nese have found (“ ‘Full impact of WTO remains to be felt’ ”:http://english.peopledaily.com.cn/200504/04/eng20050404_179323.html), the com­mer­cial pres­sure can bring much more rapid and dif­fi­cult adjust­ment for domes­tic indus­tries than the reg­u­la­to­ry changes need­ed for com­pli­ance with the WTO rules. In a book of case stud­ies that I co-edit­ed last year for the WTO—to be pub­lished in the sec­ond quar­ter by Cam­bridge Uni­ver­si­ty Press—there is an account of the chal­lenges that the bank­ing sec­tor of Viet­nam faces fol­low­ing acces­sion. There are many sim­i­lar­i­ties with the report­ed Chi­nese expe­ri­ence. I’ve also recent­ly fin­ished a project work­ing with the Min­istry of Agri­cul­ture and Rur­al Devel­op­ment (MARD) in Hanoi on a ‘roadmap’ of adjust­ments in the agri­cul­tur­al sec­tor that will fol­low Vietnam’s acces­sion. The changes, which will be dri­ven both by reg­u­la­to­ry and by com­mer­cial fac­tors, are like­ly to make a pro­found mark on Vietnam’s social and indus­tri­al envi­ron­ment. Join­ing the WTO brings about reg­u­la­to­ry and com­mer­cial chal­lenges that are epoch-mak­ing for most devel­op­ing economies (as our ‘case study book’ demon­strates) par­tic­u­lar­ly if the econ­o­my is simul­ta­ne­ous­ly in tran­si­tion from a planned to a mar­ket-ori­ent­ed eco­nom­ic con­sti­tu­tion. But the chal­lenges will be big­ger after the adop­tion of the new agree­ments being nego­ti­at­ed in the Doha round of WTO. Those agree­ments will require still more open­ness to glob­al mar­kets (and glob­al oppor­tu­ni­ties) in agri­cul­tur­al, man­u­fac­tur­ing and ser­vices mar­kets. As was the case a decade ago at the end of the Uruguay Round, only those economies that are Mem­bers of WTO before the Agree­ments enter into force will be able to take full advan­tage of the imple­men­ta­tion delays to be built into the Agree­ments. Despite the ‘price’ it is pay­ing for full mem­ber­ship of the mod­ern world trad­ing sys­tem, Viet­nam may well look back on today’s terms as a ‘bar­gain’.

Peter Gallagher

Peter Gallagher is student of piano and photography. He was formerly a senior trade official of the Australian government. For some years after leaving government, he consulted to international organizations, governments and business groups on trade and public policy.

He teaches graduate classes at the University of Adelaide on trade research methods and the role of firms in trade and growth and tweets trade (and other) stuff from @pwgallagher